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The Mizoram Gazette

EXTRA ORDINARY

Pub{ishea by .9Lutfwrity
Regn. No. NE-313(MZ)
VOL - XXXV

Aizawl,

Monday

Rs. 2/- per issue

13.11.2006

Kartika 22,

S.B. 1928,

Issue No. 296

NOTIFICATION
No.H.120 181l76/2006-LJD/4, the 3rd November, 2006. The following Act of the Mizoram Legislative
Assembly, which received the assent of the Governor of Mizoram is hereby published for general information.

The Mizoram Fiscal Responsibility

And Budget Management Act, 2006
(Act No.7 of 2006)

[Received the asent of the Governor of Mizoram on

20th

October, 2006]

AN

ACT
to ensure prudence in fiscal management and fiscal stability by progressive reduction of revenue deficit,
prudent debt management consistent with fiscal sustainability, greater transparency in fiscal operations of
the Government and conduct offiscal policy in a medium term fiscal framework and for matters connected
therewith or incidental thereto.
Be it enacted by the Mizoram State Legislature in the Fifty-sixth Year of the Republic of India, as
follows :-

1.

Short title, extent and commencement (I)

(2)
(3)

2.

This Act may be called the Mizoram Fiscal Responsibility and Budget Management Act, 2006.
It shall extend to the whole of the State ofMizoram.
It shall come into force on such date as the State Government may, by notification in the
Official Gazette, appoint in this behalf.

Definitions - In this Act, unless the context otherwise requires (a)

"annual budget" means the Annual Financial Statement laid before the House of the Stat~
Legislature under Article 202 of the Constitution oflndia;

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EX-296/2006
(b)

(c)
(d)
(e)

__ . _

-2 "Consolidated Fund" means the Fund as defined in Article 266 (I) of the Constitution ofIndia
comprising all revenues received by the Government of Mizoram, all loans raised by that
Government by the issue oftreasury bills, loans or ways and means advances and all moneys
received by the Government in repayment of loans;
"current year" means the year preceding the year for which the annual budget, Medium Term
Fiscal Policy Statement and the Fiscal Policy Strategy Statement are being presented;
"ensuing year" means the financial year for which the budget is being presented;
"financial year" means the year beginning on the Ist April and ending on 31 st March next
following;

(f) " "fiscal deficit" means the excess of total disbursements from the Consolidated Fund of the

(g)
(h)

(i)

3.

State (excluding repayment of debt) over the sum of revenue receipts, recovery of loans and
non-debt capital receipts into the Fund during a financial year;
"fiscal indicators" means such indicators as may be prescribed for evaluation of the fiscal
position of the State Government;
"fiscal targets" means the numerical ceilings prescribed in either absolutes (in Rupees crore)
or as proportions to the Gross State Domestic Product or other magnitudes for the fiscal
indicators;
"guarantees" means the liabilities (except outstanding guarantees against State Insurance and
Provident Fund, which are included in total explicit liabilities), undertaken by State Public Vehicles,
. where servicing and repayment liabilities fall on the State Government in the event of default
by the primary borrower;

G)

"prescribed" means prescribed by the rules made under this Act;

(k)

"Public Sector Undertaking" means the enterprises having equity contribution of more than
50% from the Government ofMizoram, whether departmental or non-departmental;

(I)

"Reserve Bank" means the Reserve Bank ofIndia constituted under sub-section (I) of section
3 of the Reserve Bank ofindia Act, 1934 (Act No.2 of 1934);

(m)

"revenue deficit" means the amount of excess of revenue expenditure over revenue receipts
in a financial year;

(n)

"Special Purpose Vehicle" means the instruments set up for financing of investments through
borrowings not Touted through the annual budget of the Government of Mizoram.

(0)

"total liabilities" means the explicit liabilities under Consolidated Fund of the State and the
Public Account of the State including General Provident Fund.

Fiscal Management Objectives - The State Government shall (1)

take appropriate measure to eliminate the revenue deficit and contain the fiscal deficit at
sustainable levels;

(2)

pursue policies to raise non-tax revenue with due regard to cost recovery and equity;

(3)

lay down norms for prioritisation of capital expenditure, and pursue expenditure policies that
would provide impetus for economic growth, poverty reduction and improvement in human
welfare.

__ .

4.

5.

-----

"-

'.0 ..

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EX-296/2006

.)

Fiscal Management Principles - The State Government

fiscal management principles, namely :-

__ ----0

shall be guided by the following

(1)

transparency in setting the fiscal policy objectives, in implementation of public policy and in
publication of State Government accounts so as to allow the public to scrutinize the conduct of
fiscal policy and the state of public finances as set out in section 7 of this Act;

(2)

stability upto a reasonable degree and predictability in the fiscal policy making process;

(3)

responsibility in the management of public finances.

Fiscal Policy Statement to be laid before the Legislature (1)

The State Government shall in each financial year lay before House ofthe State Legislature
the following statements of fiscal along with the annual budget, namely :(a)
(b)

Medium Term Fiscal Policy Statement; and

Fiscal Policy Strategy Statement.

(2)

The Medium Term Fiscal Policy Statement shall set forth the fiscal objectives and strategic
priorities of the State Government with clear enunciation of underlying assumptions.

(3)

In particular and without prejudice to the provisions contained in sub-section (2), the Medium
Term Fiscal Policy Statement shall include an assessment of sustainability relating to(a)
(b)
(c)

the balance between revenue receipts and revenue expenditures;

the use of capita! receipts including borrowings for generating productive assets; and
the estimated yearly pension liabilities worked out on actuarial basis, for the next ten years.

Provided that for a period offive financial years from the commencement of this Act,
pension liabilities may instead of working out on actuarial basis, be estimated by making forecasts
on the basis of trend growth rates.
(4)

Fiscal Policy Strategy Statement shall, inter alia, contain(a)

(b)
(c)

(d)

the fiscal policies of the State Government for the ensuing financial year relating to
revenue receipts, expenditure, borrowing and other liabilities including guarantees,
lending and investments, user charges on public goods/utilities and description of other
activities, such as guarantees and activities of public sector undertakings which have
potential budgetary implications;
the strategic priorities of the State Government in the fiscal area for the ensuing financial
year;
key fiscal measures and the rationale for any major deviation in fiscal measures
pertaining to revenue receipts, subsidy, expenditure, administered pricing, borrowings,
and other liabilities including guarantees;
evaluation of the current policies of the State Government vis-a-vis the fiscal management
principles set out in section 4 and the fiscal objectives set out in the Medium Term Fiscal
Plan.

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6.

Fiscal Management Targets - In particular and without

foregoing provisions, the State Government shall -

prejudice

to the generality

of the

(I)

progressively reduce revenue deficit from the financial year 2006-'07, so as to bring it down to
zero by 2008-'09 and generate revenue surplus thereafter;
(2)
reduce fiscal deficit to 3 percent of the estimated Gross State Domestic Product by 2008-'09;
(3)
reduce revenue deficit annually at an average annual reduction rate consistent with the goal
set out in sub-section (1)
(4)
reduce fiscal deficit annually at a percentage of Gross State Domestic Product at an average
'- reduction rate consistent with the goal set out in sub-section (2);
(5)
ensure that total outstanding debt, excluding public account, and risk weighted outstanding
guarantees in a year shall not exceed twice of the estimated receipts in the Consolidated Fund
of the State at the close of the financial year;
(6)
ensure to bring out annual statement giving prospects for the State economy and related fiscal
strategy,
(7)
ensure to bring out special statement along with the annual budget giving in detail, number of
employees in Government, Public Sector and Aided institutions and related salary:
Provided that revenue deficit and fiscal deficit may exceed the limits specified under this
section due to ground or grounds of unforeseen demands on the finances of the State Government
arising out of national security or natural calamity including famine relief or such other exceptional
circumstances beyond the control of the State Government:
7.

Measures for Fiscal Transparency

:
(I)
The State Government shall take suitable measures to ensure greater transparency in its fiscal
operations and minimise, as far as practicable in the public interest, secrecy in the preparation
of the Annual Budget.
(2)

In particular, and without prejudice to the generality of the foregoing provision, the State
Government shall, at the time of presentation of the annual budget, disclose in a statement
in the form as may be prescribed (a)
(b)
(c)

in case of a change, the significant changes in the accounting standards, policies and
practices affecting or likely to affect the computation of prescribed fiscal indicators;
details of borrowings, Ways and Means Advances/Overdrafts availed of from the
Reserve Bank of India;
the estimated yearly pension liabilities worked out on an actuarial basis for the next ten
years:

Provided that for a period offive financial years from the commencement of this Act,
pension liabilities may instead of working out on actuarial basis, be estimated by making forecasts
on the basis of trend growth rates.
8.

Public Expenditure Review Committee - As soon as may be after the commencement of the
Ad, the Government may, by notification in the Official Gazette, appoint a Committee to be called
the Public Expenditure Review Committee with the following features :(1)

The Committee shall consist of not more than five members with professional expertise in the
fields of Finance, Economic Management, Planning, Administration, Accounts and Audit and
Law;

EX-296/2006

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.(2)

9.

The terms and conditions of service of the members of the Committee and functions and
duties of the Committee shall be such as may be prescribed.

Measures to enforce compliance (1)

The annual budget and policies announccd at the time ofthe budget shall be consistent with
objectives and targets specified in the Medium Term Fiscal Policy for the ensuing and future
years.
(2) " The Minister-Incharge of the Department of Finance, shall review, after every six months, the
trends in receipts and expenditure in relation to the budget and remedial measures to be taken
to achieve the budget targets. The review report shall be in such form as may be prescribed
and shall explain (a)
any deviation or likely deviation in meeting the obligations cast on the State Government
under this Act;
(b)
the remedial measures, the State Government proposes to take.

10.

Power to make rules (1)

(2)

The State Government may, by notification in the Official Gazette, make rules for carrying out
the provisions of this Act.
. In particular and without prejudice to the generality of the foregoing power, such rules may
provide for all or any of the following matters, namely:(a)
(b)
(c)

the form in which Medium Term Fiscal Policy Statement shall be prepared;
the form of the Fiscal Policy Strategy Statement;
the form of Statement in which State Government shall disclose information required to
be disclosed under sub-section (2) of section 7;

(d)

(f)

terms and conditions of service of members of the committee constituted under section
8 and functions and duties of the committee;
the form of review report under sub-section (2) of section 9;
measures to enforce compliance ofthe targets enumerated in section 6;

(g)

any other matter which is requiredto be, or may be, prescribed.

(e)

'

11.

Rules to be laid before the State Legislature - All rules made under this Act shall be laid, as soon
as may be after they are so made, before the House of the State Legislature, while it is in session, for
a period of not less than fourteen days which may be comprised in one session or in two successive
sessions, and if before the expiry of session in which they are so laid or of the session immediately
following, the House of the State Legislature makes any modification in any of such rules or
resolves that any such rules should not be made, such rules shall thereafter have effect only in such
modified form or be of no effect, as the case may be, so, however, that any such modification or
annulment shall be without prejudice to the validity of anything previously done thereunder.

12.

Protection of action taken in good faith - No suit, prosecution or other legal proceedings shall lie
against the State Government or any officer of the State Government for anything which is in good
faith done or intended to be done under this Act or the rules made thereunder.

13.

Application of other laws not barred - The provision ofthis Act shall be in addition to and not in
derogation of, the provisions of any other law for the time being in force.

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EX-296/2006

14.

Power to remove difficulties (1)

If any difficulty arises in giving effect to the provisions of this Act, the State Government may,
by order published in the Official Gazette, make such provisions not inconsistent with the
provisions of this Act as may appear to be necessary for removing the difficulty:
Provided that no order shall be made under this section after the expiry of three years
from the commencement of this Act.

(2)

Every order made under this section shall be laid, as soon as may be after it is made, before the
House of the State Legislature.

sd/P. CHAKRABORTY
Secretary
Law & Judicial Department,
Govt. of Mizoram

Published and Issued by Controller, Printing & Stationery Department, Government of Mizoram
Printed at the Mizoram Government Press, Aizawl. C/8S0